Singapore's own bio-diesel fuel development from used cooking oil
presents a new energy alternative from a ready source that is
available from an abundant local supply.
Out of the frying pan . .
.
Business Times - 27 Jul 2006
. . . and into the biodiesel plant. With oil prices moving
faster than you can say 'inflation', Kom Mam Sun's alternative fuel
processing project has turned out to be a successful enterprise.
MELISSA LWEE finds out more
EVER since Kom Mam Sun gave up his stable job as an insolvency
practitioner three years ago to go into the biodiesel business, his
life has been anything but a bed of roses.
Mr Kom started Biofuel Research (Biofuel) in 2003 with two friends,
to produce and sell biodiesel made from used cooking oil. Biodiesel
is processed fuel derived from biological sources, in this case
waste vegetable oils, and can be used as an alternative fuel to
crude oil.
But what started out as a three-man collaboration eventually
dwindled to a one-man show, for soon after their endeavour began,
his two friends dropped out leaving Mr Kom to struggle along on his
own.
'It's difficult to be an entrepreneur in Singapore, especially when
you cannot see the light at the end of the tunnel,' said Mr Kom.
'After all, why would anyone give up a cushy job and fiddle around
with waste cooking oil?'
But he did not give up.
Without any knowledge of biodiesel, the business administration
graduate went for a short course in the US where he gleaned the
basics of biodiesel production. That was not enough to set up a
plant. On his return to Singapore, he furthered his biodiesel
'studies' by trawling the Internet for information.
Even though biodiesel production is not a difficult technology to
learn, what it does take is a lot of time and energy. With sheer
hard work, persistence and a process of trial and error, Mr Kom
perfected the art of biodiesel production.
'Anyone can make their own biodiesel, even in their own backyard,
but selling biodiesel for commercial use takes years of research
and testing.
'It's not just fiddling with glass beakers. Setting up a plant
takes a different skill altogether,' he said.
But even after coming up with a winning product, the problems did
not end there.
When the 32-year-old first started selling biodiesel in 2004,
clients were not interested in his product because diesel fuel was
still cheap (about S$0.50 a litre). This is despite the fact that
biodiesel is more environmentally friendly than diesel fuel.
'Nobody would ever pay a premium for biodiesel in Singapore. It is
only when you offer biodiesel at a price lower than diesel fuel
would customers come knocking on your door because they want to cut
costs,' he said.
Thus, the turning point was when crude oil prices started to
escalate (diesel fuel is currently priced at about S$0.93 a litre)
and there was greater global demand for alternative energy
sources.
And because Mr Kom stuck it through while his friends gave up, he
is now the one having the last laugh. After three years of
struggle, and thanks to the inflation of oil prices, Mr Kom finally
fulfilled his aim when the biodiesel plant in Singapore opened last
month at Tuas. The plant cost the company about $600,000. He
managed to do this with help from his older brother who gave up his
job as a systems analyst at a European bank last year to join
Biofuel.
Together, they roped in an independent investor who put in $300,000
which Spring Singapore matched dollar for dollar under the Spring
Startup Enterprise Development Scheme (Spring Seeds).
Under this scheme, start-ups can seek equity funding from Spring
Singapore, which will match funds raised by a third party investor,
up to $300,000. Seeds was launched by the Economic Development
Board in 2001 to address the financing needs of start-ups in
Singapore.
With the new plant, Biofuel can produce up to 1,500 tonnes of
biodiesel each month which the company sells mainly to small and
medium-sized logistics and construction companies at S$0.87 a
litre.
And while business has been good even though the plant only opened
last month, the company has had to stop taking orders, due to a
limited supply of waste cooking oil. In fact, supply is so short
that there is only enough waste cooking oil for Biofuel to produce
400 out of the possible 1,500 tonnes of biodiesel each month.
As such, Biofuel has looked to spread its wings elsewhere. Parties
around the region have expressed interest in getting Biofuel to
help set up biodiesel plants in their countries.
These parties, who hail from the UK, Myanmar, Indonesia, India,
China and Thailand, are all willing to fork out about US$1.2
million for a fully operational biodiesel plant.
Said Mr Kom: 'This is a niche market where there are very few
players at the moment. Their only other option would be to look to
Germany for help but the Germans would charge them about US$20
million for one plant. At US$1.2 million, Biofuel is charging them
much less for the setting up of a fully operational plant.'
Also getting in on the act is Sesdaq-listed MAE Engineering, which
is looking to set up a $150-200 million biodiesel plant on Jurong
Island.
Being a pioneer in the industry, Mr Kom also holds courses for
those interested in learning how to make biodiesel and dispenses
business information on biodiesel industry development.
Participants range from diesel sellers and palm oil equipment
makers to graduate students from various universities.
'For people like the diesel sellers, it's important for them to
know how biodiesel is made so that they have a better understanding
of the biodiesel industry.
'Others, like the research students, are just interested in knowing
more about biodiesel especially because biodiesel is a new growth
industry.'
But for those thinking of following in his footsteps, Mr Kom
advises them to think again. That's because the supply of waste
cooking oil in Singapore is simply not enough to feed more than one
biodiesel plant. Luckily for Biofuel, they got in first, he said
with a smile.
